Universal Music Group Posts Double-Digit Revenue Jump As Streaming Growth Continues

Universal Music Group earnings

Photo Credit: Tony Webster / CC by 3.0

Universal Music Group (UMG) revenue jumped by 25.4 percent year over year during Q2 2022, as streaming income once again improved by double digits.

The Big Three record label unveiled its second-quarter showing – and its continued streaming growth – this afternoon. In total, Universal Music Group said that it had pulled down €2.54 billion (the dollar and the euro were nearly even at the time of writing) during Q2 2022, which reflects the initially mentioned 25.4 percent YoY boost as well as a 17.3 percent gain in constant currency (CC).

Meanwhile, UMG’s EBITDA increased by 18.7 percent YoY (8.8 percent CC) to €507 million during Q2, net profit came in at €241 million for 2022’s first half, and net debt rested at €2.28 billion as of June 30th. Additionally, UMG identified a total of €2.61 billion in cost of revenue for both Q1 and Q2.

(Revenue and EBITDA, it bears highlighting, saw €98 million and €17 million respective quarterly increases owing to a new method of calculating payments from societies. “Recognition of that revenue is now based on an accrual for the best available estimate of when the usage occurs and the amount of consideration which is probable to be collected,” UMG specified of this method.)

Back to the Q2 revenue figure, UMG attributed €1.92 billion to recorded music (up 16.2 percent/9.0 percent CC YoY).

This total encompasses €966 million from subscriptions (up 14.6 percent/7.0 percent CC YoY), €348 million from ad-supported streaming (24.7 percent/15.6 percent CC), €303 million from physical sales (21.2 percent/17.4 percent CC), and €236 million from license and other (12.4 percent/6.3 percent CC).

Downloads continued their years-running falloff amid the ongoing rise of streaming, but nevertheless generated €69 million for Universal Music Group on the recorded side. Plus, UMG listed as Q2’s “top sellers” Olivia Rodrigo, BTS, King & Prince, Rammstein, and INI, each of whom, excepting INI and Rammstein, appeared on the same list for H1 2022.

Regionally, UMG reported the largest (by percentage growth) H1 2022 recorded music revenue hikes in Latin America (27 percent CC growth to €146 million), Rest of World (14.7 percent CC to €148 million), Europe (12.8 percent CC to €1.05 billion), Asia (10.2 percent CC to €476 million), and North America (7.1 percent CC to €1.82 billion), respectively.

Shifting to publishing, Universal Music posted €476 million in Q2 revenue (up 62.5 percent/50.6 percent CC YoY), and the figure consists of €346 million from digital (up 121.8 percent/104.7 percent CC YoY), €59 million from sync, €36 million in the performance category, €23 million from mechanical, and €12 million from “other.”

Other noteworthy takeaways from UMG’s Q2 and H1 2022 earnings report include:

Increased Merch Sales

Universal Music Group disclosed €141 million in “Merchandising and Other” revenue for Q2 2022, and amid the return of crowd-based entertainment, the sum signifies a 78.5 percent YoY improvement (65.9 percent CC). Both percentages decreased from Q1’s 81.4 percent and 69.8 percent CC, however.

Spotify and Tencent Music Stock Ownership

As of June 30th, Universal Music Group owned 6.49 million Spotify shares and 12.25 million Tencent Music shares – for a total value (based upon their respective stock prices at the time) of €636 million, or approximately €761 million less for Spotify than at 2021’s end.

Catalog Expenses and Values

UMG disclosed that it had dropped €264 million on song catalogs during the year’s first half, with the lion’s share (or all) of the total having presumably been exchanged for Sting’s body of work.

And as of June 30th, UMG officially listed €3.12 billion in catalog assets, including €1.23 billion worth of recordings and €1.89 billion worth of publishing rights.